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Rautaruukki (generally known as “Ruukki”) is a Helsinki, Finland-based supplier of metal-based components and systems to the construction and mechanical engineering industries.
Ruukki has operations in 23 countries and employs 13,000 people. Net Sales in 2005 totaled €3.7 billion.
Accenture began by helping Ruukki develop a detailed business case. This involved laying out a clear strategy and rationale for change; performing benchmarking studies; and developing key performance indicators (KPIs) to measure the effectiveness of forthcoming initiatives.
Three-quarters of Ruukki’s net sales come from its steel business: steel, stainless steel, aluminum and other metals for use in customers’ standard and prefabricated products. The remainder is represented by the company’s “solutions business”: comprehensive metal-based capabilities for construction, mechanical engineering and metal fabrication.
However, Ruukki’s marketplace is changing rapidly, with growth in its solutions business far outpacing other parts of the company. Thus, to accommodate its imminent shift from a steel company to a metals solutions provider, Ruukki recognized the need to transform its operational capabilities. This would be challenging because Ruukki’s business is vertically integrated and business activity could not be disrupted during the transition.
Accenture’s long-term relationship with Ruukki, combined with lengthy experience helping metals and discrete manufacturing companies achieve high performance, made it the right consultancy for this critical undertaking.
To describe and quantify the need for change, Accenture began by helping Ruukki develop a detailed business case. This involved laying out a clear strategy and rationale for change; performing benchmarking studies; and developing key performance indicators (KPIs) to measure the effectiveness of forthcoming initiatives.
Accenture professionals from its mining and metals, manufacturing, finance and supply chain service lines then worked closely with Ruukki on several concurrent fronts. One involved the development of a state-of-the-art operating model: wholly new processes for sales and operations planning and order-to-cash.
Key to the success of this effort was Accenture’s use of the Supply Chain Operations Reference (SCOR) model to develop new processes for managing Ruukki’s core metals business and encouraging growth in its solution business. The undertaking was particularly tricky because the core metals and solutions businesses have different priorities: efficiency and delivery accuracy for the former, and flexibility, growth and partner-network support for the latter.
A second concurrent effort involved “network simplification”: analyzing Ruukki’s distribution network capabilities and recommending ways to minimize inventories, warehouse sites and expensive subcontracting initiatives. Toward this end, Accenture professionals made site visits and performed network analyses and optimization studies. They then developed network-composition recommendations geared to maximizing the competitiveness of each business, enhancing customer service and promoting companywide growth.
A series of workshops also were held to solicit input from Accenture point experts in various fields of expertise, and to keep decision makers throughout Ruukki up to date. Lastly, a transformation plan was formulated. Ruukki has actively executed the transformation plan and the first stage has been completed.
The entire initiative was completed in an unusually short time, given the project’s exceptional magnitude; the varying priorities of different Ruukki businesses; and the company’s commitment to vertical integration. But despite these challenges, the Accenture-designed operating model, business processes and network-management approach were accepted by Ruukki’s top executives and Accenture was subsequently engaged to assist Ruukki with all SAP-related implementation work.
When completed, the initiative is expected to save the company more than €100 million—consistent with the targets that Accenture laid out in the business case. It also is clear that Ruukki’s metamorphosis from a steel company to a metals solutions provider will be fully supported by a flexible, scalable operating model—a vital ingredient in any company’s quest for high performance.
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